Sweeney introduces bills to cut NJ pension, benefit costs

David Levinsky @davidlevinsky

Thursday

May 16, 2019 at 8:06 PMMay 16, 2019 at 8:31 PM

Senate President Stephen Sweeney unveiled a package of more than two dozen “Path to Progress” bills Thursday, setting the stage for a major political battle with Gov. Phil Murphy and the state’s public employee unions, who have described many of the proposed changes as an assault on collective bargaining rights.

TRENTON — New Jersey’s top Democratic senator is ready to move forward with a plan to try to right the state’s finances and reduce its notoriously high property taxes with a mix of government reforms, including controversial changes to some public employee pensions and health benefits.

Senate President Stephen Sweeney unveiled a package of more than two dozen “Path to Progress” bills Thursday, setting the stage for a major political battle with both Gov. Phil Murphy and the state’s public employee unions, who have described many of the proposed changes — particularly the pension and benefits reforms — as an assault on collective bargaining rights.

Sweeney said he would not be deterred by the governor or union opposition. He planned to introduce all 27 of the bills Thursday and then push for approval of as many as possible before the state’s June 30 budget deadline.

“It’s time to fix New Jersey in a way that’s going to be meaningful and long lasting,” Sweeney said during a Statehouse news conference, where he predicted that the measures would collectively save the state, counties and local governments billions each year and save the pension systems from insolvency.

In order to ensure the savings are returned as property tax relief, Sweeney said he would also introduce two constitutional amendments to both implement the proposed pension and health benefit changes without Murphy’s approval and require that all local savings from them be applied to reducing the local property tax levies.

“People say you can’t do anything about property taxes; we say you can and now is the time,” he said. “We’d like to work with everyone to come to a solution, but if necessary we will go to the voters to have their voices heard.”

To get the amendments on November’s ballot would require approval by three-fifths of both chambers of the Legislature. That’s likely to be difficult given that all 80 members of the state Assembly are up for re-election this fall. Getting the amendments on the ballot next year would be considerably easier, since it would only require simple majorities to approve them in two consecutive calendar years.

The bills rolled out Thursday are hardly new. Each was based on recommendations from a bipartisan group of lawmakers, economists and financial experts Sweeney formed last year to look at the state’s finances and tax policies and address what he described as a “fiscal crisis.”

Sweeney also spent most of the last six months touring the state to hold town hall forums and deliver speeches on the proposed reforms, often times getting significant pushback from public employees and organized opposition.

Hetty Rosenstein, a leader with the Communications Workers of America, the state’s largest public employees union, described the package as a “bait and switch” that targets middle-class government workers rather than wealthy millionaires and corporations.

“This is (Sweeney’s) go-to moment. When there’s attention paid to what’s really happening economically, just push the public workers out there and make them a piñata,” Rosenstein said.

The most controversial of the bills in the package would raise the retirement age to 67 for most public employees and teachers and require new and unvested ones to move from the current defined benefit pension systems into a new hybrid system similar to a 401(k) plan.

The new hybrid system would give those employees a defined pension on the first $40,000 of their salary and allow them to enroll in a cash balance plan for their remaining income, with a guaranteed return of 4 percent or 75 percent of what the account earns from investments.

The proposed changes would not impact new police and firefighters, state troopers, judges or corrections officers. An actuarial analysis provided by Sweeney’s office predicted the change would save state and local governments about $25 billion over the next 30 years, while also carving off billions of the state’s unfunded pension liability, which is now over $100 billion based on some measurements.

More savings are expected from the proposed health care benefit reforms, which call for the state’s School Employees Health Benefits Plan to merge with the State Health Benefits Plan to create a single health care program for most state workers and teachers. It would also require all employees to move from the highest-cost “platinum” health plans to less-expensive “gold” ones.

Sweeney said the state would still cover about 80 percent of employees' health care costs under the gold-level plans but that the change would save state and local governments hundreds of millions annually and also allow them to escape the Affordable Care Act’s “Cadillac tax” on high-cost plans. That tax is scheduled to take effect in 2022 and could force New Jersey to pay as much as $600 million.

“I don’t know why it’s even negotiable at this point,” Sweeney said.

The other bills in the package are based on recommendations that garnered much less controversy but still could be difficult to implement.

One would require county executive superintendents to develop plans to merge all elementary-only and middle school-only school districts into kindergarten-through-12th-grade regional districts.

New Jersey currently has over 600 school districts, and about 300 of them would be subject to the proposed mergers, including about 22 in Burlington County.

Another bill would require the state to pay for all extraordinary special education expenses above $55,000 and require some administrative law judges to be trained specifically to handle special education placement cases. The change has been pushed by Sweeney as well as Republican senators, who argue it would likely save school districts, and their taxpayers, substantial sums.

Another proposed benefit change would cap payouts for unused sick time at $7,500.

Murphy has said he was open to finding cost savings in health care plans, but he has insisted that any changes be negotiated with unions through collective bargaining and the current Plan Design committees. He has touted $800 million in negotiated health care savings in his proposed 2020 budget as evidence that significant savings can be found in that manner.

Murphy has also pressed for lawmakers to raise the state’s income tax on earnings over $1 million, arguing that the additional revenue is needed to pay for investments in education, mass transit improvements and for middle-class property tax relief.

Sweeney and Assembly Speaker Craig Coughlin have said they would not agree to a tax increase in the upcoming budget. And while Sweeney said he would push to pass reforms by June 30, he said he would not likely incorporate the projected savings into the new budget.

“Not at this point,” he said. “We just rolled it out. We’ll see how much progress we make.”

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